Law Enforcement Associates’ future in doubt after being hit with $1M judgement

Raleigh-based Law Enforcement Associates Corp. says there are serious doubts about its ability to continue operating following a Wake County jury’s decision to award a shareholder $1.1 million in a dispute with the firm.

The company “does not have sufficient financial resources to pay the judgment,” the firm says in a filing with the U.S. Securities and Exchange Commission.

Shareholder Barbara Wortley had contended that Law Enforcement Associates (OTC:LAWE.PK) breached an agreement to repurchase 1.2 million LAWE shares she owned at $1.25 a share. The firm, which sells various kinds of equipment used by police agencies, countered that the Wortley agreement was invalid because it was “missing essential terms.”

The Wake County jury, on June 17, decided in Wortley’s favor, awarding her the $1.1 million in compensatory damages. LEA says it is considering an appeal but has not determined what steps it will take.

According to the company’s annual report, Law Enforcement Associates recorded sales of nearly $5.6 million for all of 2010, posting a net loss of $4.18 million.

The firm’s shares currently trade at 4 cents apiece and have hit a high of 25 cents during the past 52 weeks, according to Yahoo Finance. LEA employs 27 people.